Watches of Switzerland Deputy CEO: There's ‘a lot of work to be done’ in the U.S. market
Watches of Switzerland Deputy CEO David Hurley joins Yahoo Finance Live to discuss company earnings, U.S. retail presence, and the outlook for the watch market.
Video Transcript
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- Luxury retailer watches of Switzerland recently reported a 40% rise in global sales for its 2022 financial year, helping make the case for strong luxury goods demand, despite shaky global economics. The retailer recently leaned into stores dedicated to a single brand to capture that demand, including its biggest Rolex boutique in Las Vegas.
Here with more is David Hurley, the watches of Switzerland group deputy CEO, Yahoo Finance's Pras Subramanian is joining us as well. David, when you're looking, I just want to start broadly what you're seeing across the globe at your stores in terms of demand, considering inflation, considering consumer concerns about recession. Are people still paying up for watches?
- Well, morning, Julie. Great to see you. Yes, they are. We had a fantastic end to our fiscal year. As you said, we were up 40% for the year. In our final quarter, which ended at the end of April, we were up 48%. We've carried that strong momentum into the current fiscal year. So no changes to the trends that we saw, that we've seen for the last year or so.
- Hey, David. Pras here. So you used to be in charge of the US business for the group. How is that business going with the US and you're compared to the rest of the world?
- Well, we did a five-year plan about a year ago where we said that our US business was going to grow between 25% to 30% a year. And in our first year, which was last year, we were up 48%. So we still see it as a market that's under-penetrated versus our whole market in the UK.
When we compare it to other luxury group or luxury products, we see that the luxury leather goods, the market in the US, is about six times the size of the UK. Luxury jewelry, about five times. And luxury timepieces, about 2.9 times. So we still think there's a lot of work to be done. We just came into the US in 2017. We've now got retail sales here in the US of $578 million last year.
And so, we're very bullish about the market in terms of the growth. Some of the stores that you're seeing, like the store that we opened up in SoHo in November of 2018 have been a huge success for us. And, as you mentioned, we recently refurbished our oldest boutique in Las Vegas.
I was down in Las Vegas a couple of weeks ago for the jewelry couture show. We were just launching our new Mayors Diamond Campaign. And it was fantastic. Everybody there was very bullish and very optimistic, despite the headwinds that were out there.
- Across retail, one thing that we have heard is the unpredictability of inventory. But at the high end of the retail market, is that something that you get concerned with at all?
- Well, no, it isn't. I mean, we're probably in a fortunate situation compared to some other retail businesses, that for a large percentage of our business demand exceeds supply. And we know what our supply is going to be, so we've got quite a bit of predictability for our business for the forthcoming year.
- Hey, David. So I got to ask you about this, is kind of the big question that a lot of people talk to me about is the Rolex shortage. In fact, our Editor-in-Chief talked about going to the Zurich airport Rolex boutique and seeing that there was watches on display, but you couldn't buy any, they weren't for sale. How is that affecting your business? Are you guys having the same problem with Rolex supply? Or is it just kind of a bit blown out of proportion?
- Well, I think the reality is that for many years-- and it isn't just a post-covid phenomenon, demand has exceeded supply for Rolex. They don't generally make very many public statements, but they've said scarcity is not a strategy. They want to make sure they keep to the level of quality of the timepieces that they make. So we're continuing to get good supply of Rolex timepieces.
It's just that demand is exceeding it. So I think the exhibition timepieces that have been put into the stores and we put them into our stores as well are great because it allows people to try on these timepieces. And, OK, sometimes they have to wait a little bit of time and they have to be patient, but we want to keep that dream alive that people can get that timepiece that they want. We're in a very fortunate position that we get to make a lot of people very happy on a daily basis. So that's a real pleasure.
- Hey, David. You mentioned you were in Vegas for that big jewelry show. I know that you guys are actually pivoting hard more towards jewelry too here in the US. How does that split happening with regards to men versus women? Are you saying that it's equal or is it primarily mostly women in that market?
- Right. For us, we're still mainly focused on the women's jewelry market. It's only about 10% of our business, but it's growing. I think last year in the US, GDP grew about 30%, 35% of our jewelry business for our same stores, grew about 60%. So we're doing more and more in those categories. And that, of course, went down to see a lot of our major brand partners.
We just recently opened up a Bulgari boutique in Aventura adjacent to our Mayer store, which was adjacent to a new Rolex Shop and Shop that we opened. And it's had a fantastic start. So something that we're going to continue to promote.
- If you need any product reviewers, I know at least three of them here in studio right now. David Hurley, who is the Watches of Switzerland Group Deputy CEO, thanks so much for joining us, as well as Yahoo Finance's Pras Subramanian.
